ComCom warns four telcos over unfair practices

New Zealand’s Commerce Commission (ComCom) has sent warning letters to MyRepublic, Spark, Vodafone and 2degrees about breaching the Fair Trading Act

The letters follow the regulator’s announcement that retail telecommunications will be an organisation-wide priority for the Commission in 2017/18.

“The complexity and range of goods and services offered by the industry means consumers can be easily confused about product offerings. Almost every New Zealander uses a mobile or fixed-line phone and broadband, so the telecommunications sector has the potential to have a significant impact on consumers,” said Commissioner Anna Rawlings.

“As we noted when announcing our 2017/18 priorities, the telco sector continues to generate a high volume of consumer complaints, despite previous compliance and enforcement work by the Commission.”

ComCom is continuing to investigate further potential issues in the sector, including incorrect billing, failures to identify the subscription nature of mobile add-ons, incorrect calculation of broadband usage, unfair contract terms and representations concerning the nature and availability of internet services.

In the Commission’s view, the companies which have been warned are likely to have breached the Fair Trading Act by engaging in the following conduct:

MyRepublic

• Promoting its 1Gbps service up to two months before it was actually available;

• Representing that customers on its GAMER broadband service would not experience lag or latency when they could experience lag or latency caused by third party servers; and

• Incorrect representations that consumers’ rights of cancellation under the uninvited direct sales provisions of the Fair Trading Act ceased to apply once MyRepublic had commenced the service.

Spark

• Making representations that Vodafone’s 2G network was imminently closing, in the marketing of Spark’s Skinny Mobile service.

Vodafone

• Making misleading representations in the promotion of 12 month broadband plans bundled with “free” goods or services when, in order to receive the “free” goods or services, the consumer was required to pay additional fees or to take additional services; and

• On some occasions, a monthly headline price was advertised, but that price did not include the additional fees to be paid in order to receive “free” goods or services.

2degrees

• Making misleading representations about the price of its unlimited broadband plan, by not identifying or inadequately disclosing the additional cost of a modem and its delivery.

Over the last few years, ComCom has taken a number of prosecutions or actions against telecommunication companies. It fined Trustpower $390,000 in September 2016 for misleading consumers over the price and terms of its bundled electricity and unlimited data broadband offer, and Vodafone reached a $268,000 settlement with the Commission in January 2014, over the promotion of its ‘Broadband Lite’ service.

In February 2016 the Commission issued its review of unfair terms in telecommunications contracts. GTB

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